Descriptions

In renewable resource industries, labor is commonly paid with a share of
the harvested resource rather than with a per unit-of-effort wage. Share
cropping in agriculture is one well-known example and entitlement of the
crew to a share of the revenue from the sale of the catch is almost universal
among commercial fishing fleets. This paper shows that sharing
arrangements have substantial implications for the industry's profits,
optimal resource management, and the resource's ecological state.
Effectively, sharing agreements can interact with fluctuations in natural
capital to cause inefficient investment levels and skew industry rents
toward labor. As a consequence, optimal regulatory policy for such
industries must account for the implications of such sharing arrangements.
The model demonstrates why management tools like individual
transferable quotas in fisheries, have had unexpected ecological benefits in
terms of increasing and stabilizing fishery stocks. Finally, the paper
provides an illustrative example using the US Pacific albacore fishery.